Monopoly is the addition to words i.e. , ‘Mono’ + ‘Poly’ i.e. single seller in the market.Being the single single seller in monopoly market, a firm has full control on the supply of the commodity. In pure monopoly even no distinction arises between ‘firm’ and ‘industry’ i.e. firm is industry and industry is firm. Definitions
(1) According to Mc Connell,”Pure Monopoly exists when a single firm is the sole producer of a product for which there are no close substitutes.”
(2) According to Leftwitch,”Pure Monopoly is a market situation in which a single firm sells a product for which there are no good substitutes.The firm has the market for the product all to itself. There are no similar products whose price and sales will influence the monopolist’s price or sales.”
Features of Monopoly :- The main features of monopoly are as follows.
(1) Single seller and Large number of Buyers:- Monopoly market consists single seller of the product but the number of buyers stands very large.
(2) No Close substitutes :- Monopoly firm produces such commodity which has no close substitute and as a result the cross elasticity of demand become zero.
(3) Monopolist as a price-maker :- A monopolist firm can determine both price and quantity but not simultaneously ( i.e. either price or quantity at a particular time).
(4) No Entry of New Firm :- The entry of new firm into the industry is strictly prohibited.There is no competitior of monopoly firm in the market.
(5) Demand curve Negatively sloped :- Monopolist demand curve is negatively sloped and marginal revenue (MR) is less than average revenue.The slope of demand curve depends on elasticity of demand.
